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Everything You Need To Know About Fcnr Account

By Author: Arjit Chalmela
Total Articles: 10
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There are different accounts available to NRIs to park their funds. But to simplify these, they can be classified as:

Indian Rupee accounts
Foreign Currency accounts

Indian rupee accounts such as NRE or NRO are popular options for non residents to manage their investments and incomes in India. On the other hand, foreign currency accounts are maintained in foreign currency, which allow the non residents to earn interest on these deposits.

One type of foreign currency account is Foreign Currency Non Resident (FCNR) account. This is not a current or savings account but a fixed deposit account.  However, unlike a typical fixed deposit, the funds in an FCNR account can be withdrawn before the end of the period. NRI banking services typically do not pay on this deposit if it is withdrawn before the end of the maturity period. Here are some things you need to know about this account.

What currencies can be used to open FCNR account?

FCNR account can be opened in popular currencies that are easily traded like US Dollar, British Pound, Euro, Canadian Dollar, Japanese Yen, Australian Dollar. Some NRI services may offer other currencies as well but it is better to check with the bank once before.

What are the tax implications of this account?

Depositing funds in an FCNR account is tax free. The interest earned on such account is also tax free. Banks do not charge a penalty on any premature withdrawals.

How to open an FCNR account?

To open an FCNR account, you need to transfer foreign exchange into the account either through:

Internet banking
Deposit cash
Remit the funds to the bank through a wire transfer
Transfer funds from any existing FCNR account

It is not possible to use funds in an NRE account since that is an Indian Rupee account.

You can apply to open this account online through the bank’s website or fill up a form in the bank’s branch when you visit India. This account can be opened jointly with an NRI which can help in operations.

The funds in an FCNR account are freely repatriable at any time. This means you can transfer any or all of the funds abroad as and when required.

Each bank has its own minimum deposit amount for each currency for this account. If you want to open this account, you need to deposit at least that much in foreign currency.

One important thing to remember is that you can opt to automatically renew this fixed deposit. However, the bank will not auto renew it unless it has instructions to do so. Once you have deposited funds, it is possible to take an overdraft or loan against this deposit subject to the rules the bank may have about the use of funds.

Opening an FCNR account is extremely convenient and with banks having a dedicated NRI services team, the procedure has simplified even further.

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